New Financial Freedom Act allows Americans to add crypto to their 401(k)

Senator Tommy Tuberville has a bill, allowing Americans to add crypto to their 401(k) retirement savings plan without regulatory approval.
Senator Tommy Tuberville has a bill, allowing Americans to add crypto to their 401(k) retirement savings plan without regulatory approval.

Senator Tommy Tuberville of Alabama has introduced the Financial Freedom Act, allowing Americans to add crypto to their 401(k) retirement savings plan without regulatory approval.

Investors can keep crypto in their 401(k)

Tuberville’s bill is in response to the Department of Labor’s (DOL) push to keep cryptocurrency out of 401(k) investment programs because of its potential risk to investors. Employees who want to invest in crypto through their 401(k), may face legal consequences.

Senator Tuberville wrote an op-ed for CNBC on May 5 that stated:

“The Federal Government has no business interfering with the ability of American workers to invest their 401(k) plan savings as they see fit.”

He said the DOL’s regulation change on March 10 prohibiting employees from using brokerage windows to self-direct their income investments is “inconsistent with longstanding practice.”

Instead of accepting what their employer’s broker chooses for them, brokerage windows give freedom to 401(k) investors to choose what assets (including crypto) their account invests in. The Senator went on:

“The agency’s new guidance ends this tradition of economic empowerment in favor of Big-Brother government control.”

Moreover, the Labor Department’s overreaching guidance aims a massive regulatory burden on 401(k) plan fiduciaries by mandating assessment of the suitability of investments and by limiting investment options.

On April 26, investment management business Fidelity Investments announced that consumers would be able to add Bitcoin (BTC) to their 401(k) plans. In a letter to Fidelity CEO Abigail Johnson, Democratic Senators Elizabeth Warren and Tim Smith argued that there could be a conflict of interest because the firm has been engaging with crypto products since 2017. They also stated that crypto investments are subject to “significant fraud, theft, and loss risks.”

While the DOL’s new directive does not expressly mention Fidelity, it states that crypto abuses might result in trading platforms being shut down, harming investors.